“Though I want to think content is king, I’m worried platform is king,” said Jonathan Taplin, University of Southern California professor and director of USC Annenberg Innovation Lab, at Digital Book World 2016. “I think the fact that there will be five billion smartphones and mobile devices by 2020 gives content platforms extraordinary power.”

During his talk, titled “Sleeping Through a Revolution,” Taplin argued that Silicon Valley has changed the content business so that digital platforms get paid more and content producers get paid less. This has drastically changed privacy, liberty and artistry in our culture.

“We have to ask ourselves if this tech revolution has been great for everyone or if it’s only great for the few at top of a Forbes list,” he commented.

Taplin said that, over the past few decades, fields like journalism, books, music, film and television have lost money to the monopolies of Google, Amazon and Facebook. YouTube, for instance, takes 45 percent of revenue just for putting up a platform even if it only costs the company 2 percent to begin with. These changes have resulted in the loss of jobs to machines as well as the reduction of wages.

. . . .

Taplin remained hopeful that solutions can be achieved. He suggested increasing antitrust enforcement and inviting platforms like Google to get involved in turning things around. Finally, to foster artists in our zero-cost marginal economy, he proposed starting artist cooperatives.

Not the medium is the message. Rather the platform gets the cash. Amazon makes more on KDP than authors. Proportionately more on authors than the Big5. I don’t to know if that is true; I’m not an accountant.

That’s what I’m getting from it, too. Think of Twitter — free to use and post on, valued at a decent amount of money. Or WordPress, Facebook, Snapchat et al. Apple has made way more off the App Store than any developer.

When I worked in a bookstore, the bookstore took as much of the price as the publisher AND the author. Whoever handles the final sale always holds the upper hand because they are the ones who the customer knows. People don’t buy books from Macmillan, and probably don’t know the name. They know Amazon and B&N. They might remember the writer’s name, if the book is good (or VERY bad).

how does Amazon (who gets 30% of the sale price) make more money than authors (who get 70% of the sale price)?

Unless you say that Authors are not the ones publishing on KDP and instead Authors give other companies more than half of their money to upload the books to KDP, but if an Author does so, isn’t it their choice and their fault?

You have to look at KDP as a whole and all the authors publishing on KDP. Yes, an author gets 70% and Amazon gets 30% on each of the author’s books sold but that is only on the author’s own books. Amazon gets its 30% on *every* KDP ebook they sell. Unless KDP had only a few authors whose books sell, 30% of every KDP ebook Amazon sells has to be more than 70% of any single author’s books. Yes, all KDP authors in aggregate get more than Amazon, but not as much as Amazon gets from all of KDP.

This works out because KDP’s marginal cost, the cost of selling each ebook, is miniscule.

Here’s a back of the envelope calculation. Suppose KDP had 100 authors who each sold 100 books at $1. Each author would get 70% of (100 x $1) = $70. Amazon would get 30% of 100 x (100 x $1) = $3000. Amazon’s net would be almost $3000 because their cost of storage, reproduction, and delivery of each ebook is almost 0.

Without that small marginal cost, KDP would have to be a lot different than it is now. Traditional publishers have to use agents, editors and marketing organizations because they can’t afford the marginal costs of books that sell few copies. Even print-on-demand has higher marginal costs that KDP.

Like I said though, I’m not an accountant with access to anyone’s numbers, so I don’t really know. This could be all smoke. I do know a little about the economics of software compared to physical objects, which I think is similar to ebooks versus paper.

I only used $1 to make the back of the envelope calculation easy for illustration. If Amazon gets 65%, they need even fewer overall sales to gross more than authors (only 1 !).

With exiguous marginal costs, Amazon always does better when total sales are higher, so I suspect they set the sweet spot to promote total sales by discouraging prices that are outside their range for optimal sales.

I don’t know what Amazon’s delivery costs are, but when I asked accountants at the company where I used to work about marginal cost, they told me the cost of delivering software after the initial costs of development (the equivalent of writing a book) was too small to consider. They accounted for most network, storage, and compute costs, which included delivery as overhead on the entire business unit. Again with no real knowledge, I would bet Amazon does the same with ebooks: throws the cost of delivery into overhead and puts the their delivery fee into the same bin with their 30% or 65%. Only their auditors know for sure…

I don’t know what Amazon’s delivery costs are, but when I asked accountants at the company where I used to work about marginal cost, they told me the cost of delivering software after the initial costs of development (the equivalent of the author’s cut) was too small to consider. They accounted for most network, storage, and compute costs, which included delivery, as overhead on the entire business unit. Again with no real knowledge, I would bet Amazon does the same with ebooks: throws the cost of delivery into overhead and puts the their delivery fee into the same bin with their 30% or 65%. The delivery fee would be only nominally related to actually delivery cost. Only their auditors know for sure…

Amazon can give authors a better deal AND make a ton off KDP because Amazon’s costs are so low. Selling an Indie ebook must be cheaper for Amazon than selling a physical item of the same price to the consumer.